UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. 1 )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
London Pacific Group Limited
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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[_] Fee paid previously with preliminary materials.
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was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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SEC 1913 (3-99)
PRELIMINARY COPIES
LONDON PACIFIC GROUP LIMITED
Minden House, 6 Minden Place
St. Helier, Jersey JE2 4WQ
Channel Islands
April 17, 2003
Dear ADR holder:
You are cordially invited to attend the Annual General Meeting of
Shareholders of London Pacific Group Limited to be held at the Jersey Museum,
Ouless Room, The Weighbridge, St. Helier, Jersey, Channel Islands on Thursday,
June 12, 2003, at 9:00 a.m. local time.
Details of the business to be conducted at the meeting are given in the
attached Notice of Annual General Meeting of Shareholders and Proxy Statement.
As an ADR holder you are not entitled to vote directly at the meeting,
however, the ADR Depositary, The Bank of New York, is obligated to vote the
shares it holds on your behalf in accordance with your instructions. Whether or
not you plan to attend the meeting, it is important that your interests be
represented and voted at the meeting. Accordingly, please sign, date and return
the enclosed proxy card to The Bank of New York (in the accompanying envelope).
In order for your proxy instructions to be valid, they must be received by The
Bank of New York on or before June 5, 2003. You may revoke or amend your proxy
for any reason provided that such change is received by The Bank of New York on
or before June 5, 2003.
Thank you for your interest in London Pacific Group Limited.
Sincerely,
/s/R.W. Green
Ronald W. Green [LOGO]
Secretary
LONDON PACIFIC GROUP LIMITED
Minden House, 6 Minden Place
St. Helier, Jersey JE2 4WQ
Channel Islands
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To the ADR holders of London Pacific Group Limited:
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of
London Pacific Group Limited (the "Company") will be held at the Jersey Museum,
Ouless Room, The Weighbridge, St. Helier, Jersey, Channel Islands on Thursday,
June 12, 2003, at 9:00 a.m. local time, for the following purposes:
Ordinary Business
1. To receive the report of the directors and the financial statements for the
year ended December 31, 2002, together with the report of the independent
auditors thereon.
2. To re-elect a director, Mr. John Clennett, who is retiring by rotation.
3. To re-appoint BDO International and BDO Seidman, LLP as independent
auditors of the Company for the year ending December 31, 2003 and to
authorize the directors to fix their remuneration.
Special Business
4. To consider and if thought fit pass the following resolution as a special
resolution: that the name of the Company be changed to "Berkeley Technology
Limited."
Other Business
5. To act on any other matters that may properly come before the meeting.
The Board of Directors knows of no other matters which may be presented for
shareholder action at the meeting. To date, no shareholder proposals have
been received by the Company. However, if other matters do properly come
before the meeting, it is intended that the persons named in the proxies
will vote upon such matters in accordance with their best judgment.
Holders of our Ordinary Shares are entitled to twenty-one (21) clear days
notice of, and to vote at, the Annual General Meeting and any adjournment
thereof. Only ADR holders of record at the close of business on April 9, 2003
are entitled to notice of, to attend and to have their vote counted at the
Annual General Meeting and any adjournment thereof. ADR holders are not entitled
to vote directly at the meeting; however, the ADR Depositary, The Bank of New
York, is obligated to vote the shares it holds on behalf of the ADR holders in
accordance with their instructions. Accordingly, please sign, date and return
the enclosed proxy card to The Bank of New York (in the accompanying envelope).
IN ORDER FOR YOUR PROXY INSTRUCTIONS TO BE VALID, THEY MUST BE RECEIVED BY THE
BANK OF NEW YORK ON OR BEFORE JUNE 5, 2003. A copy of our Annual Report to
Shareholders for the year ended December 31, 2002, which contains audited
consolidated financial statements and other information, accompanies this Notice
and the enclosed Proxy Statement. All ADR holders are cordially invited to
attend the meeting.
By Order of the Board of Directors
/s/R.W. Green
Ronald W. Green
Secretary
April 17, 2003
LONDON PACIFIC GROUP LIMITED
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PROXY STATEMENT
-------------------------------
ABOUT THE ANNUAL GENERAL MEETING
General
This Proxy Statement and the accompanying proxy card are being mailed to
ADR holders of London Pacific Group Limited (the "Company" and, together with
its subsidiaries, the "Group") on or about April 17, 2003, in connection with
the solicitation of proxies by our Board of Directors for use at the Annual
General Meeting of Shareholders to be held on June 12, 2003 (the "Meeting"), or
at any adjournments thereof. The Meeting will be held at 9:00 a.m. local time,
at the Jersey Museum, Ouless Room, The Weighbridge, St. Helier, Jersey, Channel
Islands.
Proxies
The proxy card accompanying this Proxy Statement, which instructs The Bank
of New York as ADR Depositary (the "ADR Depositary"), is solicited by our Board
of Directors. ADRs represented by properly executed proxies received by the ADR
Depositary in time for the Meeting will be voted in accordance with the choices
specified in the proxies. Any ADR holder giving a proxy has the power to revoke
it prior to its exercise by giving notice of revocation to the ADR Depositary in
writing, or by executing and delivering to the ADR Depositary a later dated
proxy. However, such action must be taken in sufficient time to permit the
necessary examination and tabulation of the subsequent proxy or revocation
before the vote is taken. Proxy instructions, amendments or revocations must
therefore be received by the ADR Depositary on or before June 5, 2003.
Solicitation
The cost of preparing, assembling, printing and mailing this Proxy
Statement, the accompanying proxy card and any other related materials used in
the solicitation of proxies will be borne by us. In addition to soliciting by
mail, our directors, officers and employees, without receiving any additional
compensation, may solicit proxies personally, by telephone or facsimile. Except
as described above, we do not presently intend to solicit proxies other than by
mail.
Also enclosed herewith is a copy of our Annual Report to Shareholders for
the year ended December 31, 2002.
Voting and Quorum at the Annual General Meeting
Holders of ADRs should complete and return the enclosed proxy card in
accordance with the terms provided thereon not later than the close of business
on June 5, 2003. The close of business on April 9, 2003 has been fixed as the
record date for the determination of the holders entitled to give instructions
of voting rights at the Meeting and any adjournment thereof. Under the
depositary agreement between us and the ADR Depositary, the ADR Depositary shall
not vote or attempt to exercise the right to vote that attaches to the Ordinary
Shares other than in accordance with such instructions.
Two shareholders present in person or by proxy and entitled to vote shall
be a quorum for all purposes. If a quorum is present, directors are elected and
all other matters are decided upon by a show of hands, unless before or upon the
declaration of the results, a poll is demanded by the Chairman of the Meeting or
by at least three shareholders or by one or more shareholders representing not
less than one-tenth of the total voting rights of shareholders. If a poll is
taken, every shareholder who is present in person by representative or proxy
shall have one vote for every share of which he or she is the holder. Cumulative
voting in the election of directors is not permitted.
1
Proposals 1 to 3 which are described below are ordinary resolutions.
Proposal 4 is a special resolution. The approval of an ordinary resolution
requires the affirmative vote of a majority of the votes cast at the Meeting.
The approval of a special resolution requires an affirmative vote of at least
two-thirds of the votes cast at the Meeting. Accordingly, abstentions and broker
non-votes will have no effect on any resolution voted on at the Meeting.
As of March 24, 2003, there were 64,439,073 Ordinary Shares outstanding and
1,761,208 ADRs outstanding, representing 17,612,080 of those Ordinary Shares or
27.3% of the Company's total outstanding shares. Each Ordinary Share carries one
vote in a poll. Each ADR carries ten votes indirectly through each Ordinary
Share held by the ADR Depositary on the ADR holder's behalf.
For the purposes of this Proxy Statement, the term "vote" shall refer to
either a vote by a holder of Ordinary Shares or instructions to the ADR
Depositary by a holder of ADRs.
PROPOSAL 1 - REPORT OF THE DIRECTORS AND FINANCIAL STATEMENTS
To receive the report of the directors and the financial statements for the
year ended December 31, 2002, together with the report of the independent
auditors thereon.
Our Articles of Association provide that each year the above shall be
presented before a General Meeting of Shareholders. The Board of Directors
recommends a vote FOR the acceptance of the report of the directors and
financial statements for the year ended December 31, 2002, together with the
report of the independent auditors thereon.
PROPOSAL 2 - ELECTION OF DIRECTOR
To re-elect a director, Mr. John Clennett, who is retiring by rotation.
Our Articles of Association provide that at each Annual General Meeting,
one-third (or the number nearest to but not exceeding one-third) of the
directors other than Arthur I. Trueger, who, as he is also our managing
director, does not retire by rotation nor is counted in calculating the number
of directors to retire by rotation, shall retire from office by rotation. Under
our Articles of Association, there shall be no less than three directors. The
directors (other than Mr. Trueger) are elected to hold office until they are
subject to retirement by rotation. John Clennett, the nominated director for
2003, has informed us that he is willing to serve as a director. No person other
than a director retiring at the meeting shall, unless recommended by our Board
of Directors, be eligible for election to the office of director at any Annual
General Meeting unless not less than seven, nor more than twenty-eight (28)
days, before the date appointed for the meeting, a notice in writing signed by a
shareholder, and a notice in writing signed by that person of his willingness to
be elected, has been left at our registered office in Jersey.
Our Board of Directors may appoint any person to be a director, either to
fill a casual vacancy or as an additional director. Any director so appointed
shall hold office only until the next Annual General Meeting and shall then be
eligible for re-appointment, but shall not be taken into account in determining
the directors who are to retire by rotation at such meeting.
The following director, already being a member of our Board of Directors
and eligible for re-election, retires by rotation and is nominated for
re-election at this Annual General Meeting.
John Clennett Mr. Clennett, age 79, has been a non-executive
director since the Company's incorporation in
January 1985. He is a director of Ashburton
Replica Portfolio Limited and Ashburton Money
Market Funds Limited. He was a director of
Ansbacher (Jersey) Limited until 2000. He is a
member of the Institute of Chartered Accountants
in England and Wales and of the Chartered
Institute of Management Accountants. Prior to
his retirement in 1983, he was Treasurer of the
States of Jersey. Mr. Clennett is a member of
the Audit Committee.
2
Subject to re-election, Mr. Clennett will be required to retire by rotation
again at the Annual General Meeting in 2007, provided that no additional
directors are appointed, or existing directors resign, before that time.
The Board of Directors recommends a vote FOR the re-election of John
Clennett as a director.
PROPOSAL 3 - APPOINTMENT OF INDEPENDENT AUDITORS
To re-appoint BDO International and BDO Seidman, LLP as our independent
auditors for the year ending December 31, 2003 and to authorize the directors to
fix their remuneration.
We expect that representatives of BDO International will be present at the
Annual General Meeting and will be given the opportunity to make a statement if
they desire to do so and to respond to appropriate questions. BDO International
and BDO Seidman, LLP were appointed as our auditors in July 2002.
The Board of Directors recommends a vote FOR the proposal to re-appoint BDO
International and BDO Seidman, LLP as our independent auditors for the year
ending December 31, 2003.
PROPOSAL 4 - CHANGE OF COMPANY NAME
The Group's operating structure has changed significantly over the last
year due to the expected completion of the sale of Berkeley Capital Management
and the loss of the U.S. life insurance company. Venture capital is the
foundation of the Group and has been an integral part of its strategy in recent
years. Since the early 1980s, Berkeley International Capital Corporation has
arranged over $1.9 billion of placements in the private capital markets on
behalf of Group companies and clients. These placements included investments in
America Online, Oracle Corporation, Cadence Design Systems, Inc., Cypress
Semiconductor, Inc. and Packeteer, Inc. Although the recent market environment
for venture capital has been very weak, we expect opportunities for investments
in venture capital to increase in the future. The Group will be seeking
shareholder approval to change its name back to Berkeley Technology Limited,
which was the name of the Group in 1985 when it first became a public company on
the London Stock Exchange.
The Board of Directors recommends a vote FOR the change of the Company name
to "Berkeley Technology Limited."
BOARD OF DIRECTORS AND COMMITTEES
Biographical information about each director continuing in office is
provided below:
Arthur I. Trueger Mr. Trueger, age 54, is the founder and a
Executive Chairman principal shareholder of London Pacific Group
Limited. He has worked for us for more than 26
years and holds A.B., M.A. and J.D. degrees from
the University of California.
Director continuing in office for a term expiring in 2004:
The Viscount Trenchard Lord Trenchard, age 52, has been a non-executive
director since August 1999. He is joint Chairman
of The Japan Society, a Trustee of The Royal Air
Force Benevolent Fund, a director of AC European
Finance Limited and Chairman of The Dejima Fund
Limited. He was a director of Robert Fleming and
Co. Limited, or one of its principal
subsidiaries, from 1996 to 2000, where he was
also head of Japanese Investment Banking.
Previously, he was a director of Kleinwort
Benson Limited from 1986 to 1996, whose Tokyo
office he managed for many years. Lord Trenchard
is a member of the Audit and Business
Development Committees.
3
Directors continuing in office for terms expiring between 2005 - 2006:
Victor A. Hebert Mr. Hebert, age 65, has been a non-executive
Deputy Chairman director since the Company's incorporation in
January 1985 and Deputy Chairman since February
1996. He is a senior member of the law firm
Heller, Ehrman, White & McAuliffe LLP in San
Francisco, California, having joined the firm in
1962. He also serves as a director of Foster
Wheeler Ltd, a global engineering construction
and project development company, as a director
and Secretary to California & Washington Co.,
and as Secretary to Nextest Systems Corporation.
Mr. Hebert is a member of the Compensation
Committee.
Harold E. Hughes, Jr. Mr. Hughes, age 57, has been a non-executive
director since January 1987. Previously, he was
Chairman of Pandesic Company, an eCommerce
software supplier owned jointly by Intel
Corporation and SAP, from 1997 to 2000. Prior
to Pandesic, he was employed by Intel
Corporation for 23 years, during which time he
held a number of positions in financial and
operational management. Mr Hughes is a member of
the Audit, Business Development and Compensation
Committees.
One of the above directors is required to retire in each of the years 2005
and 2006. These retirement dates assume that no additional directors are
appointed, or existing directors resign, during the period. Retiring directors
are eligible for re-election.
Meetings of the Board
Our Board of Directors held seven meetings during 2002. The Board has three
committees: Audit, Compensation and Business Development. With the exception of
the Business Development Committee, each of the Committees held meetings during
2002. Director attendance at these meetings averaged 98% during 2002. Each
director attended 75% or more of the total number of meetings of the Board and
the committees on which he served.
Committees of the Board
Audit Committee
Members: Harold E. Hughes, Jr. (Chairman), John Clennett, The Viscount Trenchard
(appointed November 14, 2002), Gary L. Wilcox (Chairman, retired November 14,
2002)
Our Board of Directors adopted a written charter for the Audit Committee
that was included with the Proxy Statement issued on April 2, 2001. The primary
functions of the Audit Committee are to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing the adequacy of (i) the
financial reporting process (including reviewing the selection, application and
disclosure of critical accounting policies), (ii) financial information that
will be provided to shareholders and others, (iii) the systems of internal
financial controls that management and the Board have established, and (iv) our
audit process and to consider issues raised by the independent auditors. In
addition, the Audit Committee is responsible for considering and recommending
the appointment of, and reviewing fee arrangements with, our independent
auditors. The Audit Committee is comprised of three independent directors.
During 2002, the Audit Committee met four times.
Compensation Committee
Members: Victor A. Hebert, Harold E. Hughes, Jr. (appointed March 28, 2003),
Gary L. Wilcox (retired December 23, 2002)
The Compensation Committee approves all elements of compensation for the
Executive Chairman, including bonuses, other than grants of share options. The
Compensation Committee recommends all grants
4
of share options for the Executive Chairman, executive officers and employees to
the Trustees of The London Pacific Group 1990 Employee Share Option Trust.
During 2002, the Compensation Committee met twice.
Business Development Committee
Members: Harold E. Hughes, Jr., The Viscount Trenchard
The Business Development Committee was established on March 31, 2001 for
the purpose of dealing generally with all aspects of new business areas,
including expanding existing business internationally. Formal committee meetings
are not generally held, as individual committee members undertake specific
responsibilities for areas of new business development. During 2002, the
Business Development Committee did not hold any meetings.
Directors' Compensation
Annual Compensation
With effect from January 1, 2003, all directors' fees were reduced. Each
director receives a base annual fee of $3,750, except for the Executive Chairman
who, effective June 30, 2001, no longer receives this fee. The Deputy Chairman
receives an additional annual fee of $5,000. Each director on the Audit
Committee and Compensation Committee receives an additional annual fee of
$3,750, and each director on the Business Development Committee receives an
additional annual fee of $5,000. John Clennett and Lord Trenchard receive an
additional annual fee of $6,250 and $10,000, respectively, for administrative
duties performed for the Company in Jersey.
Share Option Plan
Under The London Pacific Group 1990 Employee Share Option Trust, a
non-executive director may be granted options to purchase our Ordinary Shares,
generally at an option exercise price equal to the market value of the Ordinary
Shares as of the date of the grant. Options expire seven or ten years from the
date of grant. Under this plan, no options were granted to non-executive
directors during 2002.
The Executive Chairman makes recommendations to the Trustees of The London
Pacific Group 1990 Employee Share Option Trust in relation to such grants to the
non-executive directors.
LEGAL PROCEEDINGS INVOLVING OFFICERS AND DIRECTORS
No material legal proceedings have been made against any of our executive
officers or directors with respect to their duties to the Company.
5
INFORMATION REGARDING BENEFICIAL OWNERSHIP OF PRINCIPAL
SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to
beneficial ownership of Ordinary Shares as of March 24, 2003 for each person who
is known by us to own beneficially more than 5% of the Ordinary Shares
(including Ordinary Shares underlying ADRs), for directors and executive
officers named in the Summary Compensation Table on page 8 of this Proxy
Statement, and for all directors and executive officers as a group.
Amount and Nature of Ownership (1)
-----------------------------------------------------------------------------
Options
Number of Exercisable Total Shares Percent of
Ordinary Within 60 Days of Beneficially Outstanding
Name Shares Owned March 24, 2003 (2) Owned Ordinary Shares
- ------------------------------------------------------------------------------------------------------------------
Arthur I. Trueger 19,260,693 3,000,000 22,260,693 34.5%
650 California Street, Suite 2800
San Francisco, California 94108
- ------------------------------------------------------------------------------------------------------------------
The London Pacific Group
1990 Employee Share
Option Trust (2) (3) 13,247,181 - 13,247,181 20.6%
Whiteley Chambers, Don Street
St. Helier, Jersey JE4 9WG
Channel Islands
- ------------------------------------------------------------------------------------------------------------------
Victor A. Hebert (4) 45,000 40,000 85,000 *
- ------------------------------------------------------------------------------------------------------------------
John Clennett 5,450 20,000 25,450 *
- ------------------------------------------------------------------------------------------------------------------
Harold E. Hughes, Jr. - 60,000 60,000 *
- ------------------------------------------------------------------------------------------------------------------
The Viscount Trenchard - 40,000 40,000 *
- ------------------------------------------------------------------------------------------------------------------
Ian K. Whitehead 400 1,334,000 1,334,400 2.1%
- ------------------------------------------------------------------------------------------------------------------
All directors and executive
officers as a group (2) 19,311,543 4,494,000 23,805,543 36.9%
- ------------------------------------------------------------------------------------------------------------------
<FN>
* Amounts represent less than one percent.
(1) Except as described in footnote (4) below, each director and executive
officer has sole voting and investment power with respect to his shares.
(2) The shares underlying the 4,494,000 options exercisable are also included
in the 13,247,181 shares held by The London Pacific Group 1990 Employee
Share Option Trust.
(3) The Trustees of The London Pacific Group 1990 Employee Share Option Trust
are entitled to notice of, and to vote at the Meeting, with each share
entitling them to one vote. The Trust has waived its entitlement to
dividends on any shares held. Victor A. Hebert, Deputy Chairman and a
non-executive director, is one of the four trustees of the Trust.
(4) The number of Ordinary Shares owned by Mr. Hebert includes 40,000 shares
held in a pension and profit sharing trust for the benefit of Mr. Hebert
over which he has shared voting and investment power. The total number of
shares beneficially owned by Mr. Hebert does not include any shares owned
by The London Pacific Group 1990 Employee Share Option Trust, of which Mr.
Hebert is one of the four trustees, and as to which shares Mr. Hebert
disclaims any beneficial interest, except for his options covering 40,000
shares.
</FN>
6
EQUITY COMPENSATION PLANS
The following table is a summary of selected information for our equity
compensation plans as of December 31, 2002.
Number of Shares
Number of Shares to Weighted Average Remaining Available for
be Issued Upon Exercise Exercise Price of Future Issuance Under
of Outstanding Options, Outstanding Options, Equity Compensation
Warrants and Rights Warrants and Rights Plans
- -----------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by shareholders (1) 13,575,312(3) $3.10 (3)
- -----------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by shareholders (2) 388,100(3) 3.73 (3)
- -----------------------------------------------------------------------------------------------------------------
Total 13,963,412 $3.12
- -----------------------------------------------------------------------------------------------------------------
<FN>
(1) Relates to The London Pacific Group 1990 Employee Share Option Trust.
(2) Relates to the Agent Loyalty Opportunity Trust which provides for the
granting of stock appreciation rights on the Company's Ordinary Shares to London
Pacific Life & Annuity Company's insurance agents.
(3) Our equity compensation plans do not contain a limit on the number of
options that may be granted to employees. However, the plans do not allow for
the issuance of previously authorized and unissued shares to meet the
obligations of the plans upon an employee option exercise. When an option is
granted, the trust that administers the plan borrows funds from us or one of our
subsidiaries and uses those funds to purchase the number of shares underlying
the option grant. The maximum loan allowed in any given year is equal to 5% of
the Group's consolidated net assets as of the end of the previous fiscal year.
</FN>
7
EXECUTIVE COMPENSATION
Our executive officers receive annual salaries and are also eligible for an
annual bonus. Mr. Trueger and Mr. Whitehead currently receive salaries of
$300,000 and (pound)120,000 (approximately $190,000), respectively. Mr.
Whitehead has agreed to waive (pound)380,000 (approximately $601,700) out of his
base salary of (pound)500,000 (approximately $791,700) until he gives further
notice. The amount of any annual bonus award to the Executive Chairman is
determined by the Compensation Committee of the Board of Directors based on the
performance of the Company and its subsidiaries. The amount of any annual bonus
award to the Chief Financial Officer is determined by the Executive Chairman.
The following table sets forth the cash and non-cash compensation paid to
our Executive Chairman and Chief Financial Officer for the last three fiscal
years. We have no executive officers other than Mr. Trueger and Mr. Whitehead.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
--------------------------------------------------------- ---------------
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation (1) Options Compensation (2)
$ $ $ # $
- ---------------------------------------------------------------------------------- --------------- -----------------
Arthur I. Trueger 2002 537,500 0 9,010 0 0
Executive Chairman 2001 950,000 6,000,000 20,305 2,000,000 0
2000 1,000,000 2,250,000 22,255 0 0
- --------------------------------------------------------------------------------------------------------------------------
Ian K. Whitehead 2002 297,035 0 0 1,000,000 143,000
Chief Financial 2001 699,892 0 0 200,000 96,668
Officer 2000 615,121 298,000 186,807 0 67,460
- --------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Amounts include directors fees, life insurance, vacation payouts and
relocation costs.
(2) Amounts represent realized appreciation in the Group's deferred
compensation plan and pension plan contributions. The amount for 2002
relates to pension plan contributions.
</FN>
Employment Agreement with the Chief Financial Officer
Mr. Whitehead joined us in September 1990 as Chief Financial Officer. His
employment is terminable either by the Company on twelve (12) months written
notice or by Mr. Whitehead on six (6) months written notice.
The base salary of the Chief Financial Officer is reviewed annually by the
Executive Chairman who takes into account the performance of the Group and the
contribution made by the Chief Financial Officer to the Group during the
previous twelve months. Bonus awards are also determined by the Executive
Chairman.
The number of share options held by the Chief Financial Officer is reviewed
annually by the Executive Chairman. Additional share option grants to the Chief
Financial Officer are recommended by the Executive Chairman, at his discretion,
to the Compensation Committee, which makes recommendations to the Trustees of
The London Pacific Group 1990 Employee Share Option Trust.
Pension Plan
The Group has a defined contribution plan for the Chief Financial Officer.
This plan was established in 2000, with $143,000 contributed during the year
ended December 31, 2002. Of the 2002 contribution, $94,000 was offset by a
salary waiver.
8
Share Option Grants and Exercises
Share options may be granted to the Executive Chairman under The London
Pacific Group 1990 Employee Share Option Trust. The Compensation Committee of
the Board of Directors considers the responsibilities and performance of the
Executive Chairman and the performance of the Group when determining the number
of options to be recommended to the Trustees of The London Pacific Group 1990
Employee Share Option Trust. The Trust may grant share options to other officers
and employees, following recommendations from the Executive Chairman to the
Compensation Committee, which, if concurring, makes recommendations to the
trustees of the Trust. The objectives of this plan include retaining the best
personnel and providing for additional performance incentives.
Grants to the Executive Chairman are fully vested on the date of grant and
expire seven or ten years from the date of the grant.
Grants to the Chief Financial Officer and other employees are exercisable
generally in four equal installments beginning one year from the date of the
grant, subject to employment continuation, and expire seven or ten years from
the date of the grant.
The following table summarizes option grants during 2002 under The London
Pacific Group 1990 Employee Share Option Trust to the Executive Chairman and the
Chief Financial Officer.
Option Grants in 2002
Percent of
Number of Total
Securities Options Market
Underlying Granted to Price on
Options Employees Exercise Date of Present Value on
Name Granted (1) in 2002 Price Grant Expiration Date Date of Grant (2)
# $ $ $
- --------------------------------------------------------------------------------------------------------------------
Arthur I. Trueger 0 - - - - -
- --------------------------------------------------------------------------------------------------------------------
Ian K. Whitehead 1,000,000 19.4% 0.43 0.43 6/10/2012 313,000
- --------------------------------------------------------------------------------------------------------------------
<FN>
(1) Mr. Whitehead's options were granted on June 11, 2002. Options are
exercisable as follows: 30% on the grant date; 17.5% on June 11, 2003;
17.5% on June 11, 2004; 17.5% on June 11, 2005; and 17.5% on June 11, 2006.
(2) The Black-Scholes model was used to calculate the present value of the
options on the date of grant. The following assumptions were used to
estimate the value of the options: a five-year expected life of the
options, a dividend yield of 0% as future dividends have not been assumed,
expected volatility for the Company's stock of 125% and a risk-free rate of
return of 3.95%.
</FN>
9
There were no option exercises during 2002 under The London Pacific Group
1990 Employee Share Option Trust by the named executive officers. The value of
the share options held by them as of December 31, 2002 is shown in the following
table.
December 31, 2002 Option Values
Number of Value of
Securities Underlying Unexercised In-the-
Unexercised Options as Money Options as of
of December 31, 2002 December 31, 2002 (1)
Shares Acquired Exercisable/ Exercisable/
Name On Exercise Value Realized Unexercisable Unexercisable
# $ # $
- -------------------------------------------------------------------------------------------------------------------
Arthur I. Trueger 0 0 3,000,000 / nil nil / nil
- -------------------------------------------------------------------------------------------------------------------
Ian K. Whitehead 0 0 2,034,000 / 700,000 nil / nil
- -------------------------------------------------------------------------------------------------------------------
<FN>
(1) Based on the closing price of our Ordinary Shares on December 31, 2002
((pound)0.055 at an exchange rate of 1.61).
</FN>
Report of the Compensation Committee of the Board of Directors
The Company's Compensation Committee of the Board of Directors (the
"Committee") is comprised of two non-executive directors. The members of the
Committee during 2002 were Victor A. Hebert and Gary L. Wilcox (retired on
December 23, 2002). Harold E. Hughes, Jr. was appointed to the Committee on
March 28, 2003. The Committee is responsible for approving and reporting to our
Board of Directors the compensation of our Executive Chairman, including base
salary and bonus. The Compensation Committee is also responsible for
recommending share option grants for our Executive Chairman, our Chief Financial
Officer and our other employees to the Trustees of The London Pacific Group 1990
Employee Share Option Trust, and for reviewing our general compensation
strategy.
Compensation Philosophy and Objectives
It is the philosophy of the Committee and the Company's management that in
order to meet our goal of increasing long-term shareholder value, we must
develop and maintain a compensation program that (i) attracts, motivates and
retains qualified executives and (ii) aligns the financial rewards of our
management with those of our shareholders.
Compensation for our executive officers includes salary and generally an
annual bonus award. All executive officers hold share options, but share options
are not necessarily granted every year. In establishing the level of
compensation for each executive officer, the Committee (in the case of the
Executive Chairman) and/or the Executive Chairman (in the case of the Chief
Financial Officer) consider many factors, with the primary factor being the
Group's operating performance and financial position. Other factors include the
executive officer's contribution to the advancement of the Group's operating
performance and financial position, strategic accomplishments such as the
development of new customers or new services and products, the development of
the Group's senior management team and the executive officer's seniority. The
Committee also takes into consideration the compensation levels of senior
executives of comparably sized, publicly held, diversified financial services
companies.
The Committee believes that the best interests of shareholders and
executives will be clearly aligned by providing executives and employees an
opportunity to increase their ownership in the Company. The Committee reviews
the recommendations made by management for the award of share option grants to
executives and employees and if, concurring, the Committee then recommends all
grants of share options for executive officers and employees to the Trustees of
the London Pacific Group 1990 Employee Share Option Trust.
10
Compensation for the Executive Chairman
The base salary for the Executive Chairman is reviewed annually. The
Executive Chairman is also eligible for an annual bonus award, which may be paid
in either cash or shares of listed equity securities held by the Group.
As set forth under the "Summary Compensation Table" above, the Executive
Chairman received total compensation of $546,510 in 2002, including base salary
of $537,500. During 2002, the Executive Chairman was not granted any options to
purchase Ordinary Shares. This compensation was based upon the Committee's
qualitative analysis of the criteria set forth above in the second paragraph
under the heading "Compensation Philosophy and Objectives."
COMPENSATION COMMITTEE
Victor A. Hebert
Gary L. Wilcox (retired December 23, 2002)
Harold E. Hughes, Jr. (appointed March 28, 2003)
Report of the Audit Committee of the Board of Directors
Management is responsible for the financial reporting process, the
preparation of consolidated financial statements in accordance with generally
accepted accounting principles, the system of internal controls, and procedures
designed to insure compliance with accounting standards and applicable laws and
regulations. The Company's independent auditors are responsible for auditing the
financial statements. The Audit Committee's responsibility is to monitor and
review these processes and procedures. The members of the Audit Committee are
neither professionally engaged in the practice of accounting or auditing, nor
experts in the fields of accounting or auditing. The Audit Committee relies,
without independent verification, on the information provided to them and on the
representations made by management that the financial statements have been
prepared with integrity and objectivity and on the representations of management
and the opinion of the independent auditors that such financial statements have
been prepared in conformity with generally accepted accounting principles.
The Audit Committee reviewed and discussed the Company's audited financial
statements for the year ended December 31, 2002 with the Company's management
and with the Company's independent auditors, BDO International and BDO Seidman,
LLP. The Audit Committee discussed with BDO International and BDO Seidman, LLP
the matters required to be discussed by Statement of Auditing Standards No. 61,
"Communication with Audit Committees." The Audit Committee received the written
disclosures and the letter from BDO International and BDO Seidman, LLP required
by Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," and discussed with BDO International and BDO Seidman, LLP its
independence. The Audit Committee considered and believes that the performance
of services related to "Financial Information Systems Design and Implementation
Fees" and "All Other Fees" is compatible with maintaining the independence of
BDO International and BDO Seidman, LLP.
On June 19, 2002, PricewaterhouseCoopers notified the Company of its
resignation as auditors for the Company and its subsidiaries and associated
entities. PricewaterhouseCoopers had served as the Company's auditors since its
inception as a public company in 1985. Subsequent to their audit of the
Company's financial statements for 2001, PricewaterhouseCoopers was approved as
the Company's auditors for 2002 at the annual general meeting of shareholders on
May 7, 2002.
The reports of PricewaterhouseCoopers on the Company's financial statements
for the two years ended December 31, 2001 did not contain an adverse opinion or
a disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles.
In connection with the audits for the years ended December 31, 2001 and
2000, and through June 19, 2002, there were no disagreements between the Company
and PricewaterhouseCoopers on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
11
disagreements if not resolved to the satisfaction of PricewaterhouseCoopers
would have caused them to make reference thereto in their report on the
financial statements for such years, except that, in connection with its audit
for the year ended December 31, 2001 and its review of the Company's unaudited
interim financial statements for the quarter ended March 31, 2002, there were
disagreements between the Company's management and the representatives of
PricewaterhouseCoopers with respect to the nature, extent and categorization of
the impairment reviews and fair value evaluations of portfolio securities in
accordance with Statement of Financial Accounting Standard No. 115 ("SFAS 115"),
"Accounting for Certain Investments in Debt and Equity Securities." These
disagreements on the application of SFAS 115 were subsequently resolved to the
satisfaction of PricewaterhouseCoopers.
PricewaterhouseCoopers and the Audit Committee discussed the foregoing. The
Company authorized PricewaterhouseCoopers to respond fully to the inquiries of
the successor auditors concerning the subject matter of the foregoing.
In connection with the audits for the years ended December 31, 2001 and
2000 and through June 19, 2002, there were no "reportable events" as defined
within Regulation S-K Item 304(a)1(v)(A), except that, in connection with its
audit of the Company's financial statements for the year ended December 31, 2001
and its review of the Company's unaudited interim financial statements for the
quarter ended March 31, 2002, PricewaterhouseCoopers recommended that steps be
taken to establish an internal audit function, improve the production of timely
and reliable financial reports in accordance with U.S. generally accepted
accounting principles ("U.S. GAAP"), and to strengthen the corporate governance
structure.
In response to these recommendations, all members of the Audit Committee
now participate in all Audit Committee meetings. The loss of control of the U.S.
life insurance company in August 2002 reduced the size and complexity of the
Group considerably. After discussion with the new auditors, the Audit Committee
felt that the appointment of an internal auditor was not necessary and that the
U.S. GAAP expertise within the Company, supported by outside consultants when
deemed necessary, is sufficient.
Following a recommendation by the Audit Committee, BDO International and
BDO Seidman, LLP were appointed as the Company's auditors by the Board of
Directors with effect from July 31, 2002. The appointments are effective until
the conclusion of the Company's next Annual General Meeting on June 12, 2003.
For the year ended December 31, 2002, PricewaterhouseCoopers billed the
Company for the following fees:
Audit and Quarterly Review Fees $173,035
Financial Information Systems Design and Implementation Fees $0
All Other Fees (primarily for tax services) $71,304
For the year ended December 31, 2002, BDO International and BDO Seidman,
LLP billed or will bill the Company for the following fees:
Audit and Quarterly Review Fees (estimated) $471,597
Financial Information Systems Design and Implementation Fees $0
All Other Fees (primarily for 401(k) plan and investment manager
performance audits) $29,305
Based on the Audit Committee's review and discussions above, the Audit
Committee recommended to the Board of Directors that the Company's audited
financial statements be included in its Annual Report on Form 10-K for the year
ended December 31, 2002, for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Harold E. Hughes, Jr. (Chairman)
John Clennett
The Viscount Trenchard (appointed November 14, 2002)
Gary L. Wilcox (retired November 14, 2002)
12
SHARE PERFORMANCE
The graph presented below compares the yearly change in the Company's
cumulative total return on ADRs for the five years ended December 31, 2002, with
the cumulative total returns of the S&P 500 Index and the S&P Insurance Index.
The comparison assumes $100 was invested on December 31, 1997 in each of the
Company ADRs, the stocks included in the S&P 500 Index, and the stocks included
in the S&P Insurance Index. It also assumes reinvestment of all dividends.
Comparison of Five-Year Cumulative Total Return
[GRAPH]
---------- ----------- ----------- ----------- ----------- -----------
1997 1998 1999 2000 2001 2002
- ----------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
London Pacific Group Limited $ 100.00 $ 112.47 $ 335.11 $ 286.02 $ 156.65 $ 2.01
- ----------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
S&P 500 Index $ 100.00 $ 128.58 $ 155.63 $ 141.46 $ 124.65 $ 97.10
- ----------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
S&P Insurance Index $ 100.00 $ 108.42 $ 115.14 $ 153.65 $ 133.26 $ 104.52
- ----------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
OTHER INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
Related Transactions
We paid legal fees of approximately $130,000 during 2002 to a law firm of
which one of our directors, Victor A. Hebert, is a member.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during 2002 were Victor A. Hebert
and Gary L. Wilcox, neither of whom have ever been an executive officer or
employee of the Group. Gary L. Wilcox retired from the Board of Directors and
Compensation Committee on December 23, 2002.
Victor A. Hebert is a senior member of the law firm Heller, Ehrman, White &
McAuliffe LLP in San Francisco, California. We retain this law firm from time to
time as legal counsel on various matters.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and related
regulations require our directors, executive officers, and anyone holding more
than 10% of the Company's Ordinary Shares to report their initial ownership of
the Company's Ordinary Shares and any changes in that ownership to the
Securities and Exchange Commission. We are required to disclose in this Proxy
Statement the failure of any reporting person to file these reports when due. To
our knowledge, based solely on our review of copies of such reports received by
us, we believe that during 2002, all reporting persons of the Company satisfied
these filing requirements.
13
OTHER MATTERS
We know of no other matters to be presented at the Annual General Meeting
other than those described in this Proxy Statement. In the event that other
business properly comes before the Meeting, the persons named as proxies will
have discretionary authority to vote the shares underlying the ADRs represented
by the accompanying proxy in accordance with their own judgment.
ADDITIONAL INFORMATION
Shareholder Proposals for 2004 Annual General Meeting
ADR holders are entitled to present proposals for action at a forthcoming
meeting of shareholders if they comply with the requirements of the Securities
and Exchange Commission's proxy rules. Any proposals intended to be presented at
the 2004 Annual General Meeting of Shareholders of London Pacific Group Limited
must be received at our registered office in Jersey, Channel Islands on or
before December 19, 2003 in order to be considered for inclusion in our proxy
materials relating to such meeting.
Availability of Annual Report on Form 10-K
A copy of our Annual Report on Form 10-K for the year ended December 31,
2002, as filed with the Securities and Exchange Commission, will be furnished
without charge to ADR holders upon receipt by us of a request addressed to:
Ronald W. Green, Secretary
London Pacific Group Limited
Minden House, 6 Minden Place
St. Helier, Jersey JE2 4WQ
Channel Islands
The enclosed form of proxy has been prepared at the direction of the
Company, of which you are an ADR holder, and is sent to you at the request of
our Board of Directors.
London Pacific Group Limited
By Order of the Board of Directors
/s/R.W. Green
Ronald W. Green
Secretary
St. Helier
Jersey, Channel Islands
April 17, 2003
14
PRELIMINARY COPIES
London Pacific Group Limited
Instructions to The Bank of New York, as Depositary
(Must be received prior to the close of business on June 5, 2003)
This proxy is solicited on behalf of the Company's Board of Directors.
The undersigned registered holder of one or more American Depositary Receipts ("
Receipts")of London Pacific Group Limited (the "Company")hereby requests and
instructs The Bank of New York, as Depositary, to vote or cause to be voted the
number of shares represented by such Receipt(s)of the Company, registered in the
name of the undersigned on the books of the Depositary as of the close of
business April 9, 2003, at the Annual General Meeting of the Shareholders of the
Company to be held on June 12, 2003, in respect of the resolutions specified on
the reverse.
NOTES: The Depositary shall not vote or attempt to exercise the right to vote
that attaches to the shares or other Deposited Securities, other than in
accordance with such instructions. If this form is not signed, dated and
returned, the Depositary will not vote such shares.
To change your address, please mark this box. / /
To include any comments, please mark this box. / /
Please complete and date this proxy on the reverse side and return it promptly
in the accompanying envelope.
DETACH PROXY CARD HERE
Mark, Sign, Date and Return /X/
/ / the Proxy Card Promptly Votes must be indicated
Using the Enclosed Envelope. (x)in Black or Blue ink.
Ordinary Business FOR AGAINST ABSTAIN
1. To receive the report of the directors and / / / / / /
the financial statements for the year ended
December 31, 2002, together with the report
of the independent auditors thereon.
2. To re-elect a director, Mr. John Clennett, / / / / / /
who is retiring by rotation.
3. To re-appoint BDO International and BDO / / / / / /
Seidman, LLP as independent auditors of the
Company for the year ending December 31, 2003
and to authorize the directors to fix their
remuneration.
Special Business
4. To change the name of the Company to "Berkeley / / / / / /
Technology Limited."
Other Business
5. To act on any other matters that may properly / / / / / /
come before the meeting.
The Board of Directors knows of no other matters which may be presented for
shareholder action at the meeting. To date, no shareholder proposals have been
received by us. However, if other matters do properly come before the meeting,
it is intended that the persons named in the proxies will vote upon such matters
in accordance with their best judgement.
[SCAN LINE]
The Voting Instruction must be signed by the person in whose name the relevant
Receipt is registered on the books of the Depositary. In the case of a
Corporation, the Voting Instruction must be executed by a duly authorized
Officer or Attorney .
This proxy card is valid only when signed and dated.
Date Share Owner sign here Co-Owner sign here
/ / / / / /